GST Council Meeting: Things That Are Likely To Become Dearer & Cheaper

The Goods and Service Tax (GST) council meeting, to be held in New Delhi today, is likely to deliberate on several key issues including taxation of online gaming, definition of utility vehicles and tightening of norms for registration and claiming ITC.

The Council, chaired by Union finance minister and comprising state representatives, is also likely to clarify on GST rates applicable on food and beverages sold in multiplexes, exempt GST on import of cancer drug Dinutuximab, and Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases, according to a PTI report.

It is also expected to finalise contours for setting up appellate tribunal, and demand of the industry for reimbursement of full CGST and 50% IGST in 11 hill states under the 'scheme for budgetary support'.

The Council is likely to provide for mandatory physical verification of the business premises of "high risk" applicants before granting of GST registration, as well as reduced time for submitting Pan-linked bank account details to GST authorities.
Also, a new rule in GST law under which businesses would be required to explain the reasons for excess input tax credit (ITC) claimed or deposit the amount with the exchequer is likely to be discussed, added the PTI report.

The Law Committee, comprising tax officers from Centre and states, have opined that where the ITC availed in GSTR-3B return exceeds the amount of ITC available in accordance with the auto-generated statement GSTR-2B by a specified threshold, the registered person may be intimated on the portal about such difference and be directed to either explain the difference or pay the excess ITC along with interest, PTI reported.

Below are things that are likely to become cheaper:

1. Food and beverages inside cinema halls: Multiplex Association of India (MAI) has recommended reduction in taxes on particular categories of food and beverages (F&B) sold inside the cinema halls from the current 18% to 5%. It is worth noting that food items sold inside the cinema halls emerged as key sources of revenue for cinema owners as they contribute 30-32% of annual earning. Presently, move tickets below Rs 100 get taxed at the rate of 12% while those above the threshold attract 18% GST.

2. Medicines: Medicine, a crucial thing, may get a tax-cut as the fitment committee suggested that medicines costing Rs 36 lakh should be exempted from GST as patients generally raise funds via crowdfunding. Fitment committee recommended reducing the GST rates on unfried snack pellets to 5% from 18% and suggested that exemption from the 12% Integrated GST (IGST) when cancer medicine (dinutuximab/qarziba) is imported by individuals for personal use.

3. Satellite services launch: It is likely to become cheaper as committee has suggested tax exemption.

Things that might become dearer:

1. Online gaming, casinos, and horse racing are likely to get dearer: Meghalaya Chief Minister Conrad Sangma-led committee recommended to raise the taxation of online gaming, horse racing, and casinos. The committee has a broad agreement that a 28% GST should be levied on all three supplies. Meanwhile, Goa recommended an 18% tax should be levied only on platform fees and contributions to the prize pool should be tax-exempt.

2.MUVs and XUVs likely to become costlier: The fitment committee recommended that all utility vehicles ( Multi Utility Vehicles or Crossover Utility Vehicles (XUVs)) would attract a 22% cess provided they meet three parameters -- length greater than 4-metre, engine capacity greater than 1,500 cc and ground clearance in 'un-laden condition' of more than 170 mm.

Meanwhile, the GST Council is expected to decide on the TCS liability of suppliers engaged in e-commerce trading via the government's Open Network for Digital Commerce.

The Committee has suggested that the provision should kick in if the difference is more than 20% and more than Rs 25 lakh. GST Council is likely to take a final call on the recommendation of the Committee in its 50th meeting on Tuesday.